‘We see Gabon SEZ becoming the biggest Wood Panel Production Hub of Africa by 2025’

‘We see Gabon SEZ becoming the biggest Wood Panel Production Hub of Africa by 2025’

The West Central African country of Gabon is a fascinating success story of turning a forest land into a business-friendly haven. Thanks to GSEZ, a public private partnership (PPP) project that changed the entire landscape by developing the Nkok Special Economic Zone. The GSEZ succeeded in attracting over 155 investors from 17 countries in a span of just 7 years. India needs a special mention here as almost one third of the total investors are either Indians, NRIs or PIOs. Wood processing industry is the major driver for Gabon as more than two third of its total investors are focussed on wood processing.
Mr. Jasveer Singh, Chief Executive Officer of Gabon SEZ, Nkok spoke to Modern Woodwork at length on host of opportunities at GSEZ and how he sees GSEZ becoming a fully-grown industrial woodworking hub over the next decade.

In conversation with a leader who committed himself to a mission of developing and marketing an integrated multiproduct Special Economic Zone in the equatorial land of hidden opportunities.

Modern Woodwork: Gabon SEZ has completed 7 years since inception. How satisfied are you with the kind of response GSEZ is getting? At the last count, some 123 companies had their establishments in GSEZ. Where does this figure stand now and are there any big companies from India?Mr. Jasveer Singh: Gabon SEZ was launched in September 2011 and since then it has been a long but exciting journey. It is a matter of pride for us that the SEZ acted as a catalyst in the industrialization journey of Gabon and made it a veneer manufacturing hub in a short span of 7 years. Today, thanks to the 38 veneer units in SEZ, Gabon is the biggest producer of veneer in Africa and number one veneer exporter in the world. Encouraged by the enquiries that we are getting now from potential investors, we are working hard to make Gabon’s presence felt on the wood panel manufacturing map of the world. Our current push is towards incentivizing investors who have shown keenness in putting up manufacturing units of plywood, particle board, MDF and other kinds of engineered wood panels in the SEZ. The attractiveness of SEZ as a plywood manufacturing destination has been further enhanced by the decision of M/s Windson Chemicals, Bilimora, Gujarat to set up a formaldehyde and resin plant in Gabon SEZ. The plant shall be operational by December 2019.
As of now, the total number of investors in the SEZ stands at 155 from 17 countries. We have 66 units in production and another 39 in construction phase. Normally it takes 15 years for SEZs to be fully operational, but things have moved fast in Gabon SEZ because of the ease of doing business inside SEZ. Two of the Indian giants – Greenply and Centuryply have manufacturing units inside SEZ.

GSEZ has invested in 95 log trucks that would bring raw material from forest and in 85 flat-bed container transport trucks to move the finished product to the port

Modern Woodwork: Gabon SEZ has invested US$ 450 million (INR 3,150 crore) in building high quality infrastructure for industrial development. We understand that you are investing further US$ 100 million (INR 700 crore) in transport and logistics sector. How do you see the progress of these investments? Will this be able to attract more Indian investors and create more jobs for Indians in Gabon in near future?Mr. Jasveer Singh: Gabon SEZ is spread over 1,350 hectares of which 600 hectares has been developed in first phase. US$ 350 million was utilized to develop the Phase 1 of SEZ which includes 8 lane direct access to the National Highway -1, development of railway siding to accommodate three trains in parallel, two barging facilities, dedicated 90 KV main receiving sub-station fed by two sources of power (one hydroelectric and another gas based), self-sustainable water sourcing with 7 million litres/day storage capacity, broadband connectivity, centralized social infrastructure (hospital, police station, fire station and residential development) and Single Window Clearance facility for all industry related approvals. As a result of this investment, the SEZ boasts of a world-class infrastructure that provides an enabling platform to investors to set up industries without any hassles or time lag. It is the result of this investment by GSEZ that investors with 17 nationalities got attracted to Gabon – a small, lesser known but peaceful country in Africa.
With the growth of industries in SEZ, currently, there is an increased demand for raw material (≈1,00,000 cbm/month) and finished product transport (≈2,000 TEUs) to sea port. SEZ has utilized US$ 100 million to buy 95 log trucks that would bring raw material from forest, to buy 85 flat-bed container transport trucks to move the finished product to the port, development of five railway sidings and log yards on the trans-Gabon railway line, purchase of 200 railway wagons and three locomotives. This investment will give comfort to investors on the long term availability of raw material.
With efficient infrastructure and sufficient raw material, we surely hope to attract more investments from India and increase trade between Gabon and India. Since increased production cannot be achieved without generating more jobs, surely it will generate jobs both for Gabonese nationals and Indians. Currently, SEZ based industries employ about 1,200 Indians and 3,400 Gabonese plus other nationalities.

“Our current push is towards incentivizing investors who have shown keenness in putting up manufacturing units of plywood, particle board, MDF and other kinds of engineered wood panels in the SEZ”

Mr. Jasveer Singh

2009

2019

Veneer Manufacturing in Gabon

Ban on export of round logs

l Limited veneer manufacturing

l#1 in veneer manufacturing in Africa

l#1 in veneer exports in the world

Wood Processing Industries in Gabon

Overall Gabon: 82

l Nkok SEZ: 0

Overall Gabon: 221

l Nkok SEZ: 82

Processed Timber Exports from Gabon

Overall Gabon: US$ 73 million

l Nkok SEZ: 0

Overall Gabon: US$ 450 million

l Nkok SEZ: US$ 150 million

GSEZ acted as a catalyst in the industrialization journey of Gabon and made it a #1 veneer manufacturing hub in Africa in a short span of 7 years.

Modern Woodwork: How big is the timber sector of SEZ and how does it compare with processing outside SEZ? Where do you see GSEZ by 2025?Mr. Jasveer Singh: The total timber export from the SEZ in year 2018 was worth approximately US$ 150 million; while timber exports from whole Gabon stands at US$ 450 million. By 2025, we expect export from SEZ itself to be around US$ 500 million; while exports from whole Gabon would touch US$ 900 million. Surely, timber sector would be the second biggest contributor to the Gabon’s economy in next decade after Petroleum.
We envisage Gabon SEZ to be Africa’s leading Wood Panel Production Hub by 2025 and achieving the status of a fully-grown and matured furniture manufacturing hub by 2030.

GSEZ has all the infrastructure to facilitate wood processing

About GSEZGabon Special Economic Zone (GSEZ) started in 2010 as a joint venture between Olam International Ltd. (40.5%), the Republic of Gabon (38.5%), and Africa Finance Corporation (21%) with a mandate to develop infrastructure, enhance industrial competitiveness and build a business-friendly ecosystem in Gabon. The SEZ offers a unique fiscal status which provides a stable and competitive economic climate for companies intending to settle. Presently, the zone is home to more than 155 investors coming from 17 different countries. Gabon Special Economic Zone is rapidly emerging as West Central Africa’s manufacturing hub.

Modern Woodwork: Readers would like to know more about the tax benefits an investor is supposed to get in GSEZ and furthermore, for how long GSEZ will remain a tax haven?

Mr. Jasveer Singh:

Fiscal incentives to units in GSEZ:

No Corporate Income tax for first 10 years and a preferential rate of 10% over the next 5 years

No Customs Duty on the import of capital good (shed, construction material, plant and machinery for the industry) as well as raw material

No VAT

No Property Tax

100 % exemption from capital gains tax

Other relaxations and waivers:

Relaxed Labour laws and flexibility in employing expatriates

Reduced Export Duty for products manufactured in SEZ

100% repatriation of profits

Upto 25% DTA sales permitted

The tax incentives stated above are available for a period of 25 years to all industrial units from their start date

No need to have a local partner. Foreign Investors can own 100% of shares in a company and own assets in the country

Safest and most stable country in Central and West Central Africa

Easy e-visa and work permits

Single Window System for all approvals for setting up industry and its operations

GSEZ would embark upon a mission to plant, post EIA clearance, about 50,000 Ha/year of Acacia or Eucalyptus within a radius of 200 km of SEZ. The output from these plantations would in many ways influence the growth of timber sector in Gabon.

Modern Woodwork: In one of your earlier interviews to Modern Woodwork magazine, you had mentioned that Gabon is economically most stable country in the sub-Saharan region and the CFA Franc (XAF) is pegged to Euro. Do you see any impacts of the Eurozone crisis or Brexit or the ongoing trade war between USA and China on the local economy? How are you safeguarding investors’ interests?Mr. Jasveer Singh: Yes, Gabon is one of the economically most stable countries in the sub-Saharan region given good volume of exports of commodities like crude oil, manganese and timber products. Gabon is one of the few countries in sub-Saharan region with positive trade balance.
As far as Eurozone crisis or Brexit is concerned, Gabon may in fact gain competitiveness, due to pegging of the local currency to a weakening Euro. This is because the depreciation of the Euro could help to make exports of timber and other products from Gabon more competitive in world markets; especially in the case of the dollar-based exports.
Ongoing USA – China trade war is resulting in more prosperity for Gabon because many Chinese companies in timber sector which were earlier exporting to USA from China are now thinking about investing on second manufacturing base in neutral countries and Gabon presents as an ideal option given the sustainable supply of timber and ready infrastructure in shape of Nkok SEZ.

Modern Woodwork: A lot is talked about the Gabon Forestry Code. Would you briefly explain about the Code? Any FSC (Forest Stewardship Council) compliant industry inside SEZ?Mr. Jasveer Singh: Gabon’s forests covers 22.8 million hectares, i.e. 88% of the country’s land surface. In 2008, Gabonese Republic reported an average annual deforestation rate of 0.12%.With a low overall population density and 60% of population living in urban areas, there is little anthropogenic pressure on Gabon’s forests.
The new forest law has come into force in the year 2001 that emphasizes Sustainable Forest Management (SFM) as the overall approach in the forestry. The forest concessions (logging licenses) are issued for 25 years’ term by Ministry of Forest. As per the forest code, the concessionaire of the forest must submit a detailed 25-year Forest Management Plan. This overarching submission is accompanied by species inventories, forest conservation plans, and a 5-year harvesting plan that is updated every 5 years. This plan also restricts harvesting to tree diameter. For instance, in a given 1-year block, no Okoumé below 70 cm diameter can be harvested. This selective harvest plan allows the smaller trees to mature in a manner that utilizes the available canopy for maximum growth. These species on average will grow 2 cm in diameter every year. To delineate how this works in the abstract, a 69 cm diameter or smaller tree will grow for a further 25 years, adding an estimated 50 cm by the next harvest cycle. This will result in an estimated diameter of 119 cm at the time of the next harvest. Most importantly, this 25 year plan guarantees that there will always be more growth in Gabon’s forest than will ever be harvested. This is one of the most productive and best forest management technique as on date.
GSEZ has three companies which are putting the systems and processes in place for FSC compliance. Further, the Gabon government has announced that all forest concessions have to be FSC compliant by 2022.

For trade and business-related queries, please visit www.gsez.com or contact:

Ms. Heena Saboo,
Resident Representative in India, GSEZ

heena.gsez@gmail.com

+91 83830 57074

Mr. Nitin Misra,

Head of Marketing, GSEZ

misra.nitin@arisenet.com

+241 02 00 10 86

The depreciation of the Euro could help to make exports of timber and other products from Gabon more competitive in world markets; especially in the case of the dollar-based exports.

Mr. Jasveer Singh

Modern Woodwork: What kind of opportunities are there for a small, medium and a large Indian investor from the field of woodworking in GSEZ? What kind of minimum investment is required? Please explain with a case for better understanding of our readers.Mr. Jasveer Singh: There are a variety of investment options in the field of woodworking in GSEZ. For small ticket-size, Gabon is an ideal destination for those who are in furniture manufacturing and exporting to Europe and USA markets given the vast raw material availability with FSC/SFM-compliant timber which is mandatory for these markets. The geographical proximity to markets will be an added advantage for furniture manufacturers. Manufacturing of furniture components and supplying to mother units in home countries is also a good option.
Establishing a saw mill augurs well for medium size investors since the investors will have captive markets with SEZ in form of furniture manufacturers. In addition, export to various timber hungry markets like south-east Asia, China, Europe, USA fetches good returns to saw mill units.
Engineered wood panels like plywood, particle board, MDF or WPC (wood-plastic composite) are opportunities in large investment segment given the huge quantities of wood waste being generated by current wood processing units in the SEZ. As of now, around 50 wood processing units are in production and they generate around 950 MT of wood waste every day. This wood waste is a potential raw material for all kinds of engineered wood panels.

Modern Woodwork: How does India fare from investments and exports point of view as far as GSEZ is concerned? What kind of outreach activities do you plan to undertake to introduce GSEZ to potential investors from various parts of India? How can one approach GSEZ if he/she wants to know more about the procedure to invest in Gabon?Mr. Jasveer Singh: As on date, we have around 50 industrial units promoted by Indians/NRIs/PIOs, and that too beyond wood processing, in sectors like pharmaceuticals, cement, metallurgy. India is very important geography for us in terms of investors as well as consumer of products from the SEZ. We have been actively marketing GSEZ as an investment destination in India and intend to do so further as well. We participate in all prominent wood related exhibitions in India to reach out to potential investors and to market the products from GSEZ. We shall be participating in Delhiwood 2019.
We have a full-time representative in Delhi. Anyone who is interested in exploring Gabon for setting up industry, may please contact Ms. Heena Saboo, Resident Representative (heena.gsez@gmail.com; +91 83830 57074) or Mr. Nitin Misra, head of marketing (misra.nitin@arisenet.com; +241 02 00 10 86).

GSEZ: An opportunity for every ticket-size

Small Enterprises:

Ideal for furniture manufacturing units exporting to Europe and USA

Ideal for furniture component manufacturing to supply to mother units in home countries

Medium Enterprises:

Ideal for establishing a saw mill, availability of captive markets within SEZ in form of furniture manufacturers

The wood waste generated from existing units is a potential raw material for all kinds of engineered wood panels.

Modern Woodwork: We must mention the Centre D’Exposition Gabon Wood Hub which we visited in June 2018. It was a wonderful, all ‘Made in Gabon’ display of furniture and artefacts using local species. What special incentives you offer to prospective furniture manufacturers to set up furniture factories in GSEZ apart from the tax concessions?Mr. Jasveer Singh: Thanks. All the beautiful furniture that you saw at the Centre D’Exposition Gabon Wood Hub during your visit to Gabon Woodshow 2018 was made by the furniture units in the Furniture Manufacturing Cluster within the SEZ.
With regards to the special incentives for prospective furniture manufacturers to set up furniture factories apart from the fiscal incentives for SEZ investors, we provide readymade sheds exclusively for furniture manufacturing and the investor is supposed to invest only in machines. This translates to a very short time for starting the production.

Modern Woodwork: Further to the prospects of making export quality furniture using species in Gabon, which wood varieties are available in required abundance?Mr. Jasveer Singh: Species like Iroko, Beli, Ovangakol, Dabema, Sapelli, Sipo, Acajau, Kossipo, Andoung, Gheombi, Tali, Padouk, Debetou, Okan, Azobe, Movingui, Belinga, suitable for making export quality furniture are available in good volume in Gabonese forests. Gabon’s reserves of exploitable timber stock of 400 million cubic meters includes 130 million cubic meters of Okoumé, 25-35 million cubic meters of Ozigo, 20-30 million cubic meters of Ilomba, 15-25 million cubic meters of Azobé and 10-20 million cubic meters of Padouk.

Modern Woodwork: Our readers would like to know which species one should opt for making different varieties – for example – varieties ideal for outdoor furniture/suitable to make indoor furniture etc.Mr. Jasveer Singh: Gabon’s forests offer more than 400 timber species. Around 80 timber species are frequently traded and some 20-25 species are in high-demand across the globe.
Hardwood Species like Sapelli, Sipo, Acajou, Andoung, Gheombi from Gabon are pinkish red to brownish in colour and are similar to Genuine Mahogany (Swietenia macrophylla) in terms of colour, appearance and density. These timber species could very well serve as an alternative for Mahogany as it is listed in CITES Appendix II. These species are suited for luxury and high-end furniture and joinery. This is the reason for their high demand in Europe and USA due to its colour perception. They are exported in high volumes to China, Vietnam and Malaysia, as they are the biggest manufacturers and exporters of furniture to developed countries.
Wenge is the premier, dark hardwood from the forests of Gabon and suitable for contemporary interiors as it blends quite well with glass and stainless steel. Due to its dark colour, it is well suited for straight/clean line furniture and is quite popular in Europe.
Iroko, Beli, Tali and Okan species can be considered as an alternative to provide teak like finish. These species are quite popular in Asia and Middle East for furniture and joinery. Tali and Okan are extensively used in furniture manufacturing in Vietnam, mainly for export and has helped Vietnam to become the second largest exporter of furniture after China. Furniture made out of these species is very popular in Asian and American markets.
Light coloured tropical wood species from Gabon includes Izombe, Movingui and Bilinga. These species have appearance similar to Merbau/Kwila and are suitable for furniture as well as joinery and interiors.
Kevazingo (Guibourtia Spp.) is the most expensive and coveted wood species from the forests of Gabon. Trunk diameter of 150 cm is quite common for Kevazingo. Live-edge table tops made from it is in high demand in China because of its natural beauty and its coherence with customs and beliefs of Chinese community world over.
Padouck is a dark coloured redwood found in Gabon; quite similar to Rosewood and suitable for outdoor furniture as well as joinery. Outdoor flooring, decking and garden furniture made out of it is exported to European markets. It is resistant to damage from weather elements. Padouck is also very popular in southern part of India due to its red colour and high density. Doors and door frames made from Padouck are very popular in the South Indian markets.